The comment came after a workshop on public-private partnership in higher education at the headquarters of University Grants Commission.

Furthermore, at the Economic Relations Division offices, Muhith told the journalists that the Bangladesh Bank (BB) has “failed” in its capacity as the banking industry’s watchdog to prevent such loan scam from taking place.

But when The Daily Star contacted three former central bankers, BB officials and an economist, a different picture emerged.

As per sections 45 and 46 of Banking Companies Act 1991, the central bank is perfectly within its rights to recommend recast of a state bank’s board for the sake of public interest and discipline in the banking sector.

BB officials said the Sonali Bank management was asked on several occasions to take drastic action against the officials involved in the scam — but they fell to deaf ears.

Former BB governor Salehuddin Ahmed even wondered how the finance minister made such comment.

“If Bangladesh Bank does not have that authority, then who does? It has every right to suggest reconstitution of the board — and it has done the right thing,” he said.

Ahmed said as per law the central bank is responsible for regulating and supervising the banking industry — and that includes the state-run banks.

“All will point fingers at the Bangladesh Bank if the financial sector experiences a lapse of discipline,” he said.

“It would appear as negligence of duty if the Bangladesh Bank had not taken such step, and all would have blamed the central bank then.”

“There is nothing wrong in making such request,” said Mohammed Farashuddin, another former central bank governor.

He, however, was in agreement with Muhith regarding the central bank’s failure in arresting the scam and even suggested that higher-ups of Sonali Bank might have been involved with the swindle.

“It is unfortunate that agencies of government are dwelling on relatively trivial procedural matters rather than the substance of corruption,” said Ahsan H Mansur, executive director of Policy Research Institute.

“We are not doing what we should be doing,” Mansur, a former economist at International Monetary Fund, said.

He said there have been allegations of corruption in state-owned banks, and it is not totally unbecoming given the lack of professional people in the boards.

“The board is largely political. People there are mostly politically connected, and a politically appointed board mostly fail in its role to supervise.”

Mansur said similar types of anomalies are most likely to be present in other public banks.

“The government should carry out audit in all state-owned banks by internationally competent firm to identify the damage that has been done by this kind of abusive lending,” he said.